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TGIF – Market’s First Red Week Since September Comes to a Close

A down week?

What is that?  Since when do markets go lower?  Well, they don't generally (any more) and this market hasn't had a down week since the first week of September, when the S&P was at 2,450 so it was a nice 150-point run (6.12%) before pulling back and the 5% Rule™ says we can expect a 30-point weak retracement to 2,570 and that's exactly what we got but 2,570 is still a 5% gain (2,572.5 actually) and, as long as that holds – it's still bullish – just a minor correction

As you can see (or at least extrapolate) on our Big Chart, 2,600 is the 20% line on the S&P so of course we're going to get a pullback there.  It's going over that line that's going to be siginficant and, rather than a bearish hedge, we're going to be needing bullish hedges to play the upside from there.  

That's right, we already have bearish hedges in our Short-Term Portfolio and our Options Opportunity Portfolio and we don't want to get rid of those but, above the milestone S&P 2,600, we are going to want to hedge the hedges – in case the next 20% move up wipes them out and turns them into very expensive, unused insurance.  When we hedge a hedge we go long the laggards – the indexs that are underperforming in anticipation that they would catch up.  

We tend to take a hedge like that each quarter and, in May (19th), I was on China Global Television discussing the Brazil Crisis and we decided it was low enough to make a bullish play out of it and our trade idea at the time was:

So I like EWZ down here ($32.75) and we can take advantage of this dip with the following:

  • Sell 5 EWZ 2019 $25 puts for $2 ($1,000) 
  • Buy 10 EWZ 2019 $25 calls for $11.50 ($11,500) 
  • Sell 10 EWZ 2019 $35 calls for $5.50 ($5,500) 

That's net $5,000 on the $10,000 spread that's over $7,000 in the money to start.  The upside potential is $5,000 which would be a 100% return on your money and your worst-case downside would be owning 500 shares of EWZ for net $30/share ($15,000).   The ordinary margin on the short puts is just $780 so it's a very margin-efficient play as well.

As you can see, we have already blasted over our targets and the short puts are already down to $1.25 ($625) while the $25/35 spread is now $15.50/$8 so net $7.50 ($7,500) for a net net $6,875, which is a nice $1,875 (37.5%) return and well on the way to the full $10,000 so this trade will still make another $3,125 (45%) over the next 14 months if EWZ is kind enough to hold $35 – that's almost half of our original gains.

In October, we saw that Russia was our lagging index given that Putin was doing so much "winning" that we were, in fact, sick of all the winning – as his agent suggested we would be last year.  My trade idea from the 11tth's Report, titled "Which Way Wednesday – Are the Markets Now Too Big to Fail?" was for Putin's ETF (RSX):

So why not back a winner and invest in Russia?  At least we know the leadership there is stable – I don't see Putin having any Twitter wars with his staff or members of the Duma, do you?  It's a shame we missed the dip in June but Russia is begining to usurp the US on the International stage, so why not place a small bet on Rex Tillerson's favorite country?  Here's a nice spread for RSX:

  • Sell 10 RSX 2019 $20 puts for $1.75 ($1,750)
  • Buy 15 RSX 2019 $20 calls for $3.30 ($4,950) 
  • Sell 15 RSX 2019 $25 calls for $1.05 ($1,575) 

Here we're laying out just $1,625 in cash on a spread that will return $7,500 if RSX is over $25 in Jan, 2019.  That's a potential gain of $5,875 (361%) in 16 months and the risk is owning 1,000 shares of RSX at $20, plus the $1,625 cash if all is lost on the spread so net $21.08 is still $1.17 (5%) cheaper than it is now as your worst case.  

What we like about trades like that is a limited downside.  Even if all goes poorly and Russia is below $20 in 16 months, we don't feel it's likely to go much below $20 and that means we can turn it into a long-term hold that diversifies our portfolio internationally – so little harm done, even if it fails.  On the plus side, this spread is $3,375 in the money to start – so all Russia has to do is not go lower and we double our money.  THAT is the way we like to play the market at PSW!  

RSX hasn't gone anywhere since then.  Well, it's gone a lot of places but it's back to where it was, more or less.  Still, because of our "Be the House – NOT the Gambler" strategy, where we always sell premiums to others in our positions, we still win and, so far, the short $20 puts are $1.52 ($1,520) and the $20/25 spread is $3.15/0.85 for net $2.30 ($3,450) for a net net $1,930 which is up $305 (18.5%) in less than a month – despite not really winning on the stock movement.  

Meanwhile, at $1,930, this is still a good hedge as it returns $7,500 if Putin can keep winning and, as Trump promised – even if we are sick of all the winning and beg him to stop – he won't stop – ever

We'll see next week if the S&P can take that 2,600 line and hold it but a rejection here should first give us a correction at least to 2,540 and that's why we chose /ES as our short at 2,590 and we got a run all the way back to 2,565 at the bottom yesterday and 25 S&P points are good for gains of $1,250 per contract in the Futures.    

Yesterday morning wwas fun, we saw the earnings on Macy's (M) and I was surprised the stock wasn't moving so, at 10:03, I put out a note in our Live Member Chat Room as well as a Top Trade Alert saying:

M/Jabob – Over $18 already, silly boy.  cool  Earning $3 per $18 share could be my Stock of the Year for next year since LB has gotten away from us.  

In the very least, M should be a Top Trade today as we can certainly say we'd LOVE to own them at this level:

  • Sell 10 M 2020 $20 puts for $6 ($6,000)
  • Buy 30 M 2020 $15 calls for $5.20 ($15,600) 
  • Sell 30 M 2020 $22 calls for $3 ($9,000) 

That's net $600 on the $21,000 spread that's $3 ($9,000) in the money to start (but you have to clear $20 to cash in the longs without impairment).  Seriously, this would be my Trade of the Year for 2018 if it were Thanksgiving at this price!   M is already in the OOP and LTP and I'll consider later if I want to adjust but today's report justified our targets.  

Unfortunately, the stock didn't stay cheap for very long and you can see the reaction right at 10am as our Members began to scoop it up.  We finished the day at $19.50 and already the spread is net $3,750 for a one-day gain of $3,150 (525%), which is a pretty good start but it's a $21,000 spread so still $17,250 (460%) left to gain and now we're 13,500 in the money to start – so still a great Trade of the Year candidate and you are only $3,150 behind our Members on this one trade idea, as you wisely saved $3/day by NOT SUBSCRIBING HERE!  

There are all kinds of market mismatches to take advantage of and, as promised, now that we have 2/3 of the earnings reports out of the way, we are able to make intelligent guesses as to the outcomes of others.  Next week we have Tyson Foods (TSN), Home Depot (HD), Cisco (CSCO), L Brands (LB), Williams-Sonoma (WSM), Manchester United (MANU), Net App (NTAP), Abercrombie and Fitch (ANF) and Buckle (BKE) as potential earnings plays to look at.    

LB was going to be our 2018 Stock of the Year and we did add it to our portfolios in August but they have already popped 30% so we had to flip to M, which was lagging but still a potential big winner in the retail space.  ANF is interesting as they are down to $830M at $12.18 and they are certainly capable of making more than $40M for a p/e of 20.  I think expectations are low enough that anything positive can get them a pop – but I'd take quick money and run on that one. 

We'll decide next week which ones we'll play and, if you want to save $21 by not subscribing, we'll be happy to tell you after the fact how well we did!  

Have a great weekend, 

- Phil


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  1. FU FTR!!!!!

  2. That's a shame, overdone BS reaction.  Nice to see the rest of the portfolio up though; imagine if FTR had been up too.

  3. Dividend Danger? Frontier Communications ( FTR) has slumped 6.9% to $7.41 after getting cut to Underperform from Neutral at BofA Merrill Lynch on concerns about its dividend.

  4. 9:33


    Macy's moving higher on renewed M&A speculation  (19.78 +0.28)




    Walt Disney + 3% in pre-market trade following last nights earnings after execs provided some early color on the upcoming ESPN and Disney streaming services  (102.68)

  5. Sorry, from

  6. Late start today. Was helping my 81 year old father cut some woods for the wood furnace. He left school when he was 12 years old and still working 70 years later….




    12:22 PM ET 11/9/17 | CFRA



    9:43 AM ET 11/10/17



    % Chg






    Real time quote.



    SNPMarketScopeResearchNotes2017-11-09 12:22:52.000MMACY'S, INC.Efraim Levy, CFACFRA REITERATES BUY OPINION ON SHARES OF MACY'S, INC.We lower our 12-month target by $1 to $26, or 9.3X our FY 19 (January) EPS estimate of $2.80. We use a discount to M's five-year average forward P/E multiple amid a challenging market for department stores. We raise our FY 17 EPS estimate by $0.25 to $3.40. A 7.9% dividend yield adds to total return. Despite secular headwinds and risks, we see cash flow sufficient to sustain the dividend with potential upside from real estate monetization. Adjusted Oct-Q EPS of $0.23 vs. $0.17 is above our $0.16 estimate. Same-store sales were down 4.0% versus the consensus, for a 2.7% decline.

  8. Will FTR stay above 7? 

  9. WPM   had earnings yesterday.  Weren't we waiting for something, possibly adverse, in the report?  We discussed this a while back, but don't remember the details.

  10. Phil,

    SRCL – when time permits, I proposed an analytical exercise (of a bit of a dog of as stock) with a view to the future. Company is dominant in medical waste industry, steadily rising sales. However, earnings have been declining along with margins. Terrible mgt team by reputation, questionable acquisitions and trumpesque treatment of clients (just settled 300m class action suit).  

    At a 2 yr low, and, with a nod to TA, with very low RSI (<20) and island reversal today. Thought this might be a candidate for a turnaround should future new mgt (and activist interest) attempt to correct the above.

    Your thoughts appreciated.

  11. /Rb- anyone going long for weekend push up? Scary at these levels. 

  12. Wood/Stj – Love it!

  13. STJ – Cool picture !

  14. FTR/Jaobob, Baron – I wish they would pull the Dividend and drop the stock to $3 so we could buy the crap out of it while they pay down debt.  Meanwhile, Jabob, this is for you:

    Faruqi & Faruqi, LLP, a leading national securities law firm, reminds investors in Frontier Communications Corporation (“Frontier Communications” or the “Company”) (FTR) of the November 27, 2017 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.

    If you invested in Frontier Communications stock or options between February 6, 2015, and May 2, 2017, and would like to discuss your legal rights, click here There is no cost or obligation to you.

    You can also contact us by calling Richard Gonnello toll free at 877-247-4292 or at 212-983-9330 or by sending an e-mail to

    The lawsuit focuses on whether the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that: (1) the Company acquired a substantial number of non-paying accounts as part of its acquisition of the wireline operations of Verizon Communications, Inc.; (2) as a result, the Company would be required to increase its reserves, and write-off amounts from accounts receivable associated with the nonpaying accounts; and (3) as a result of the foregoing, the Company’s public statements were materially false and misleading.

    Specifically, on February 27, 2017, the Company announced disclosed a net loss of $80 million for the fourth quarter of 2016, and stated that its results were impacted by the “resolution of nonpaying acquired CTF accounts,” referring to accounts acquired in the Verizon Acquisition. CEO Daniel McCarthy elaborated, stating, “Results for the fourth quarter were impacted by our intensified efforts to resolve acquired accounts in California, Texas and Florida that we have determined to be non-paying.”

    This certainly isn't helping boost the stock price at the moment so, if you can't beat them, you may as well join them – they are looking for a loud complainer – you're perfect!  

    Geez, Jean Luc, if you're too cheap to buy the old man a cord of cut wood (or central heating!), the least you can do is buy him an electric saw for $40!  cheeky

    Actually, God bless the guy, that's so great.  What I wouldn't give to still have my Dad around…  Just saw my aunt (his sister) this summer in England – she's still in good shape.  All the people in my family who don't smoke live into their 90s…  

    Here's my Mom (77) and her boyfriend – check out the slab of meat she devoured!  

    Image may contain: 2 people, people smiling, people sitting, table and indoor

    WPM//Stock – No, we're straight up bullish on them.  A bit more than halfway to goal with a year to go is right on track and no surprises from earnings:

    Long Call 2019 18-JAN 15.00 CALL [WPM @ $20.91 $-0.25] 20 12/16/2016 (434) $11,300 $5.65 $0.57 n/a     $6.23 $-0.51 $1,150 10.2% $12,450
    Short Call 2019 18-JAN 25.00 CALL [WPM @ $20.91 $-0.25] -20 12/19/2016 (434) $-5,500 $2.75 $-1.32     $1.43 $-0.29 $2,640 48.0% $-2,860
    Short Put 2019 18-JAN 17.00 PUT [WPM @ $20.91 $-0.25] -10 12/19/2016 (434) $-4,150 $4.15 $-3.09     $1.06 $0.03 $3,090 74.5% $-1,060

    SRCL/8800 – On the bright side, revenues keep going up and mean companies will do what it takes to make a profit. Still, $5.5Bn is 27x last year's $200M income and last Q they lost $144M, so no surprise people are running away from this stock.


    $68 is a 20% drop from $85 and that didn't hold so nothing to get excited about when they bounce off the 25% drop ($63.75), which is pretty much that bottom of the wedge line.  I agree it's a good niche business but you have a lot of "if then then maybe that" in your investing premise (as opposed to a solid macro trend) so I'd be careful about committing too much. 

    The good news is, you can simply pick up a bull call spread, like the 2019 $70 ($6)/80 ($3) bull call spread for $3 and that pays $10 if they make a comeback for a $7 gain (233%) with no margin and little risk.  Assume you can pull the plug at $1.50 – the net Delta is 0.16 so it would take a $10 drop to hit you that hard and, at that point, you could either sell puts for $3 to pay for it (the $45 puts are $1.50 and would be over $3 on a $10 drop) and ride it out of just pull the plug so very little risk if you bought 10 for $3,000 and a nice, potential reward – even when playing it cautiously. 

    /RB/Ravi – We usually go long late Weds or Thurs if there's a good bottoming, which we kind of had at $1.80.  At this point, I'd just stay away:

    /SI, on the other hand, is back off our $17 line very nicely:

  15. Phil,

    Thanks for the SRCL analysis. This one is somewhere between a longer term turnaround (I feel to accomplish that there has to be a new CEO) and a classic Jabo FU stock.

  16. I only lost 10s of thousands not over 500k in FTR. Great tax loss carry forward call!

    But thanks Phil.

  17. Phil – Your mom is very attractive.

  18. Albo sorry he does not look like his mom!!!!!!

  19. Phil,

    Good genes. What's with SGYP, up 10% and now down 2%?

  20. Phil, I have 6 aapl 2019 bcs 170/185 for 6.52 and sold 3 145 puts for 10.88, now 6.70. Thinking of rolling the puts out to 2020 145’s for 11.05 now. Is that a wise move you think/ thanks

  21. Yodi – 8-)

  22. LB – New recovery high.

  23. Scottmi – FWIW.  Sold some WIN.

  24. ST. Jude-that's what my garage looks like. 11 degrees here today. Takes a lot of wood to stay warm with a wood furnace, but stops one from being lazy. No shortage of wood around here though.

  25. You're welcome 8800.

    FTR/Jabob – Well maybe if you double down a few more times, you can get there!  devil

    Mom/Albo – Yeah, she's a hottie.  Also has the cute English accent so the boys in Fla all line up at her door.  Unfortunately, she's like my Grandmother and no guy ever measures up.  My grandmother was single for 30 years – went through about 100 boyfriends and always managed to find some flaw, no matter how much they loved her.  I'm just glad to see my Mom dating, she spent years taking care of my stepfather, who lost his kidneys and went on dialysis.  Her life was on hold for so long…

    Thanks Yodi.  Well, certainly my mother thanks you…

    SGYP/Baron – They are only 7 months along with Trulance with just one indication (trials are ongoing) and people are disappointed there isn't more progress but:

    Starting January 1, 2018, Aetna will move TRULANCE to Tier 2 preferred brand status and UnitedHealthcare will remove the new-to-market block and place TRULANCE on formulary. These are examples of significant wins, and they will add to the momentum we are building with commercial payers.

    For Medicare Part D, we're really pleased that already approximately 13% of our business is through Part D. That is a very good start, considering, again, we're 7 months into launch. And we're going to continue to work with these payers to improve access even more. As an example, Cigna Medicare Part D has updated their formulary and removed the prior authorization and placed TRULANCE on their highest-branded tier, and this coverage will extend throughout 2018. TRULANCE will also remain covered on the highest-branded tier for Express Scripts Medicare Part D for all of 2018.

    Again, these are examples of significant wins. And overall, for the largest Part D plans that cover the majority of lives, we're expecting access to grow to approximately 60% for the beginning of 2018, which is only 9 months post launch.

    We're also seeing positive momentum for Managed Medicaid. As an example, starting January 1, 2018, Caremark Managed Medicaid will move TRULANCE to Tier 2 preferred position. And overall, for the largest Managed Medicaid plans that cover the majority of lives, we are expecting access to grow to approximately 65% for the beginning of 2018.

    As everyone knows, it can take some time to start to see these types of decisions and agreements, particularly with Part D and Managed Medicaid. So we are very encouraged with our progress 7 months into launch with 1 indication. There are several other discussions going on right now with additional payers that will be finalized soon, which will further add to the momentum we are building with payers overall.

    At this pace, they won't make it more than 3 quarters before needing to raise money and the forward guidance on sales and pending approvals for additional treatments indicate a long time-line to break-even so they'll have to either raise cash or, more likely, will begin to use their $300M line of credit, which is a bit scary.  

    AAPL/Jomp – Nothing wrong with picking up an extra $5 as long as you don't need the margin for anything else for another year.  Looks like it costs about $11K in margin to get $11K in cash so it's not inefficient, but not thrilling because, of course, you are choosing to sell puts when AAPL is at a new high in a low-vix environment.  Maybe just buy back the 2019 puts and keep an eye on the 2020 $150 puts, now $13 and sell them at no less than $11.50 but hope AAPL dips $10 first and you can get $16+ for them.  

    LB/Albo – Yawn.  They are now in the "set and forget" pile.  

  26. pirateinvestor 

      Its was 8 last night in St. Paul

     Keep warm

  27. Snowing in downtown Chicago! Way early for this….

  28. from

    When are the exchanges going to list 2020 LEAPS®?

    2020 LEAPS will be rolled out over a three month period.

    Cycle 1: Monday, September 11th, 2017: January 2020 LEAPS® listed

    Cycle 2: Monday, October 16th, 2017: January 2020 LEAPS® listed

    Cycle 3: Monday, November 13th, 2017: January 2020 LEAPS® listed

  29. QC

    R U on your way to the islands again? Our son is still doing rehab on his home in TCI, completely gutting it after the hurricane, or I would be on a plane in a heart beat. I have a sneaking suspicion we will be having the Ice Caves open this year after hearing that the polar vortex is in swing again. That means the Lakeview house will be in super high demand. No leaving then, drat. Really no place nice to stay up here. I'm booked through Nov right now.

  30. Dad / Phil – He is using an electric chainsaw already. They can't buy the wood cut already so someone has to do it. That keeps him in shape. He is very reluctant to ask for help or spend money. I am going to go buy their first clothes dryer this week. It's a different generation! Everybody on his side lives to be close to 90 as well. Good genes!

  31. Phil- have u heard that the execs of the FANNG stocks are dumping millions of shares of their stock? That would account for the wild swings going on, but at sometime……what goes up must come down.  Newton's law.

  32. Shroyer- we have some snow, but the winds have been gusting so hard it has scoured it off. Very little wind today, but the lakefronts are just plain devastated. Lost part of road into the lake that the DOT won't allow to be repaired; houses sinking with the erosion from underneath. Another nightmare in the works. Lake Superior at unprecedented highs and waves that look like the ocean.

  33. pirateinvestor 


    On my way to Spain for 10 days this year


    I have family coming over for the holidays

    keep me post on the ice craves 

    we are looking for some cold weather thing to take them to see,  maybe the snow train in Wisconsin have you try that train ride ?



  34. On the subject of beautiful women…

    Hedy Lamarr would be 103 yesterday, and this:

  35. QC- that sure sounds like fun. Yes I sure will let you know about the ice caves and I have taken the train and it is a blast. However, I heard they are trying to shut it down so don't really know the status. There is a train out of White Bear, but it might only run in the summer. Glensheen is always a great place to take visitors as it is decorated for Christmas and is unique with a great family story. If I hear anything I'll let you know.. Have a good visit and EZ flights on your trip!!

  36. TWTR is interesting as they just raised the character limit and launched their $99 subscription thing:

    Our OOP target for them is $18 and that's sensible but it's for Jan and we'll be called away and it's $20 in the LTP – also to be called away with full gains.  

    As a replacement trade, I don't want to go crazy and I think either their new stuff works or it's an epic fail so I think just a bull call spread is good though there are no 2020s yet, so that's annoying.  Still, I'm worried they will pop from here so let's lock it down and add:

    For the OOP:

    • Buy 15 TWTR 2019 $15 calls for $6.60 ($9,900) 
    • Sell 15 TWTR 2019 $22 calls for $3.10 ($4,650)
    • Sell 5 TWTR Jan $21 calls for $1 ($500) 

    That's net $4,750 on the $10,500 spread so $5,750 (121%) upside potential if TWTR gains just 10% next year.  Of course our goal is to sell at least $500 worth of calls every other month and knock off $3,000 or so from our basis.

    For the LTP:

    • Buy 50 TWTR 2019 $15 calls for $6.60 ($33,000) 
    • Sell 50 TWTR 2019 $22 calls for $3.10 ($15,500)
    • Sell 20 TWTR Jan $21 calls for $1 ($2,000) 

    Here we're netting in for $15,500 on the $35,000 spread so the upside is $19,500 (125%) and hopefully $12,000 worth of short calls to sell.  Of course when 2020s come out we'll probably roll our long calls to those, which will then give us more of a safety net to sell more short-term calls (and puts when there's a dip). 

    Polar Vortex/Pirate – That is nasty – stay safe. 

    Dad/StJ – I guess he remembers the Depression or, at least, the first-hand stories of the Depression well enough to be a spendthrift.  Probably why, after the war, he left school so soon to start working.  Glad you had a chance to visit – I'm seeing my Mom in two weeks.  

    FANNG/Pirate – I've heard of FAANG and FAAANG (AVGO, ADBE) but not FANNG.  Anyway, it's the percentages that matter.  A lot of this stuff is done for tax reasons – so don't rush to judgement.  Even Steve Jobs sold AAPL stock from time to time.   If I were one of those guys and my stock was up 50% for the year and it was 80% of my wealth – I'd be cashing quite a lot of it in!  

    Hedy/Scott – Reminds me of.

  37. Hi Phil.  I have neglected to adjust my old LB position, currently  long 10 Jan19 55 calls (basis 10); short 5 Jan19 55 puts (9) and short 10 Jan19 32.5 puts (5.30).  Certainly in a better position recently, but is there a good adjustment at this point?  Thanks.

  38. The Most (And Least) Toxic Places In America

  39. A Starbucks Coffee Costs What? – WSJ

  40. Predicting The Fastest-Growing Jobs Of The Future

  41. Trump Pitches ‘America First’ Trade Policy at Asia-Pacific Summit

  42. How did the news go ‘fake’? When the media went social

  43. Bob Goodlatte, chairman of the committee that will impeach Donald Trump, abruptly announces retirement

  44. China’s Xi Takes On Role as Guardian of Globalization

  45. There is a wave of Republicans leaving Congress

  46. WIN/Albo – I never got in.. are you working your way out or just working down cost basis?

  47. /SI took a nice hit following /YG down.  I just added one long at $16.87, happy to DD at $16.75 for about $16.80 avg for the long haul.  

    Oil took a nice dip too:

    LB/Taihu – Damn, no adjustment at $35?  If you are not going to stop out of a position when you are down 20% it has GOT to be because you WILL make an adjustment when you are down 40%.  At least the 2020s are and you are saved by the sale of the $32.50 puts (now $2.60).  The $55 calls are still $5.80 and that's more than you paid for them so you can just salvage that money by rolling out to the 2020 $45 ($11)/$55($7.50) bull call spread at $3.50, which is a really good deal.  If it's the short 2019 $55 PUTS you have – that's a good target, so I wouldn't worry but you could cash those ($12.50) and the $32.50 puts ($2.60) and roll them to 10 of the 2020 $40 puts at $7.50 for much better than even.  

    Reuters/UofM Consumer Sentiment dips in November

    • Nov. Consumer Sentiment97.8 vs. 100.7 expected and 100.7 prior.
    • Current economic conditions 113.6 vs. 116.5 prior.
    • Index of consumer expectations 87.6 vs. 90.5 prior.

    TD Ameritrade Reports October Metrics

    • TD Ameritrade (NASDAQ:AMTD) Oct. average client trades per day of 680K up 19% M/M and up 55% Y/Y.
    • Total client assets of $1.14B up 2% M/M, up 49% Y/Y.
    • Average spread-based balances of $150.9B 14% M/M, up 31%Y/Y.
    • Average fee-based balances of $217.7B up 5% M/M, up 29% Y/Y.
    • Press Release

    Wheaton Precious Metals -3% as production declines dent Q3 results

    • Wheaton Precious Metals (WPM -3.4%) is lower after posting in-line Q3 earnings on 13% lower revenues vs. a year ago, as lower attributable production and lower metals prices weighed on the bottom line.
    • WPM says it sold 5.8M oz. of silver, 6% lower than in the year-ago quarter, and 82.5K oz. of gold, down 3% Y/Y; the average realized silver price fell 14% Y/Y to $16.87/oz. and the average realized gold price slipped 4% to $1,283/oz,
    • WPM attributes the reduced silver output to 17% lower silver production from Primero Mining’s struggling San Dimas mine in Mexico and an 18% drop in silver output at Hudbay's Constancia mine in Peru.
    • For the full year, WPM estimates attributable production of 28M silver oz. and 340K gold oz..
    • ArcelorMittal (NYSE:MT+4.7% premarket after easily beating Q3 earnings expectations with revenues rising more than 21% to $17.08B from $14.52B a year earlier.
    • Q3 steel shipments rose 6.8% Y/Y and 1% Q/Q to 21.7M metric tons, shipping more steel in all regions except Europe, but even there the fall was less than the usual seasonal decline near the end of the year; Q3 iron ore shipments climbed 8.1% Y/Y to 15M metric tons.
    • “Operating conditions continue to improve, with key indicators including the ArcelorMittal weighted PMI implying a positive outlook for 2018,” says CEO Lakshmi Mittal.
    • Citing improved market conditions, MT says it now expects to increase its FY 2017 investment in working capital to $2B, up from earlier guidance of $1.5B.
    • Cameco (NYSE:CCJ) wound up rallying 3.5% in today's trade for its highest close in more than a month following news it will suspend production from its McArthur River mine and Key Lake mill because of low uranium prices.
    • Initial investor concerns were outweighed by the outlook for higher uranium prices caused by the move – “This is the type of supply shock that will spur strength in the spot price,” says Cantor Fitzgerald analyst Rob Chang.
    • CEO Tim Gitzel says CCJ is not planning further cuts to uranium output “right now” but has the option of lowering production again without jeopardizing supply contracts – "We have to be ready if the market stays low so we can survive and be viable."
    • TD Securities expects upward pressure on uranium prices in the coming days but believes other producers also will need to cut supply for sustainable price gains; the firm reiterates its Buy rating on CCJ and raises its stock price target to C$15 from C$13 in anticipation of higher uranium prices.
    • Uranium peers finished higher in today's trade: UEC +18.2%URG +16.9%UUUU +14%DNN+13.3%WWR +8.5%.
    • ETFs: URANLR

    • Canadian Solar (CSIQ +7.2%) opens higher after Roth Capital upgrades shares to Buy from Neutral and raises its price target to $24 from $15, seeing an attractive entry point for investors after CSIQ sank 11% yesterday following disappointing Q3 earnings.
    • Roth believes an "overwhelming sense of cynicism" is now priced in and sees "real asset value" at CSIQ, as the firm's sum-of-the-parts analysis suggests the stock should be worth $24; the company's Japanese portfolio alone is worth $9/share, the firm says.
    • Roth also expects a balance sheet transformation at CSIQ over the next six months.
    • General Electric (GE +1.8%) pushes back above $20 in today's trade but Cowen analyst Gautam Khanna thinks shares may have more downside ahead, as the firm reiterates its Market Perform rating on the stock.
    • Khanna says his sum-of-the-parts analysis puts GE's breakup value at $11-$15, meaning such a move would be a "value destructive proposition."
    • "We see no economic argument for a full-scale break-up of the company, and thus no quick fix for the stock," Khanna writes. "The turnaround will take time, and… the eventual FCF/share recovery will be to a lower level than commonly perceived."
    • General Motors (NYSE:GM) has scheduled an investor event dedicated to self-driving vehicles.
    • In a webcast on Nov. 30, it will host "our vision for an autonomous future," where it will likely outline plans for commercialization of its technology.
    • An innovation that seemed a few years away from commercialization is advancing rapidly; Google's Waymo announced this week that its vehicles have been going without human drivers in the Phoenix area, and that it will open those rides up to members of the public soon.
    • The U.S. is in talks to sell F-35 fighter jets to Persian Gulf partner nations, says a senior U.S. military official during a visit to the United Arab Emirates.
    • “Discussion is ongoing now with the new administration on selling F-35s to partner nations that need them, that require them,” says U.S. Air Force Vice Chief of Staff Stephen Wilson.
    • Separately, Norway has received the first three of 40 F-35 fighters it ordered from Lockheed Martin (LMT) as part of efforts to strengthen its air force.
    • Norway has committed to order 40 of the planes, with an option for another 12; the estimated cost of acquiring 52 new combat aircraft would be NOK67.9B ($8.36B) in 2015 values.

    Tesla's junk paper slips further

    • The company's eagerly bought up $1.8B August bond offering priced to yield just 5.3%, and quickly slipped below par. The bonds, however, had managed to hold above $0.97 on the dollar for most of October.
    • November hasn't been as kind, and the eight-year paper today traded down to below $0.94, or a yield of 6.32% – nearly 400 basis points above comparable maturity Treasurys.
    • "Third-quarter results put some pressure on the cash flow needs," says CFRA's Efraim Levy, meaning sweet deals – whether through an equity or debt offering – won't come as easily.
    • TSLA is down 0.15% today.

    Disney rebounds as it shifts focus to streaming plans

    • Rebounding from a disappointing earnings report, Walt Disney (NYSE:DIS) is up 2.6% today as analysts digest news from its earnings call on its streaming-video plans as well as yet another trilogy of Star Wars films.
    • Bob Iger revealed plans to roll out the ESPN Plus streaming service in the spring, and suggested the company might pursue early uptake of 2019's Disney-branded streaming service by pricing it "substantially" cheaper than Netflix (NFLX -1.9%) — though acknowledging it will have much less content than Netflix at first.
    • The company's making the right steps with its plans to target evolving media consumers with the two streaming services, JPMorgan's Alexia Quadrani says. The next two fiscal years look good for the film slate as well, she notes, with a pair of Star Wars canon films yet ahead, and another trilogy on the way along with stand-alone films like Solo. She has an Overweight rating and $125 price target, implying 19% upside.
    • Goldman Sachs kept the company at Conviction Buy and raised its price target to $120 from $115, noting trends are improving at ESPN.
    • Macquarie hoped for more clarity on 2018, and has raised its price target to $100 (current price is $105.38). And Jefferies reiterated its Hold rating.
    • The struggling retailer zoomed higher yesterday after earnings weren't as bad as feared, and is up another 2.4% this morning.
    • Barron's last week suggested Amazon (NASDAQ:AMZN) could buy Kohl's if it wants to get into brick and mortar department stores. If that's the case, says Dealreporter, Amazon ought to focus on "quality over quantity," and have a look at Macy's (NYSE:M).
    • Previously: Macy's beats by $0.04, misses on revenue (Nov. 9)
    • J.C. Penney (NYSE:JCP) got the bad news out of the way with its earnings warning two weeks ago, so shares are naturally rallying hard following the actual news.
    • Turns out, comp sales rose 1.7% vs. JCP's guess two weeks ago that they would be up just 0.7%.
    • Adjusted loss per share of $0.33 was better than the $0.40-$0.45 guidance.
    • Full-year comp sales are now seen at flat to negative 1%. Adjusted EPS is guided to positive $0.02-$0.08 – the same guidance from two weeks ago.
    • Conference call at 8:30 ET
    • Previously: J.C. Penney beats by $0.10, beats on revenue (Nov. 10)
    • Shares +7.6% premarket

    Apple acknowledges iPhone X issue in some devices, plans fix

    • Apple (NASDAQ:AAPL) acknowledges an issue with some iPhone X devices becoming unresponsive in cold temperatures and plans to fix the problem.
    • The problem first came to light on Reddit, which inspired a post at The Loop and Apple’s response. 
    • Apple says the screen becomes fully responsive again within “several seconds” and that a fix will come in an "upcoming" software update. 
    • Previously: Apple acquires image sensor start-up (Nov. 9)

  48. Congrats to GreenCoin players, by the way.  2,000% gains since our last discussion.  Remember though, this whole thing could go back to 0 in a heartbeat so take the original bet off the table in the very least.  Doesn't take much in the game to make money if they go up another 20x (and get more liquid, which they are not at all now).  

  49. Phil, thanks for the LB advice, I will take it!   Another question:  I sold 10 2020 apple 190 calls at $24.50,  but stayed  naked on the call side for 2020, thinking the stock would take a step back.  Looks like it is now stalled at 175 and heading higher into the holidays.  Wait it out or cover?

  50. Phil,

    Having trouble understanding monthly put option time premium differentials in PCLN:

    For the 1500 put strike, the Jan asked is $10.90 but the Jun ( 3 x the time – 214  vs 70 days) is $63 ( 5.5 x the premium) whereas the Jan 19 is $110 premium ) approx twice the Jun of $62 which seems appropriate for twice the time (434 vs 217 days). Is Jun just an aberration? Same relationships seem to hold for the 1400 strike.

    The Jun option would appear to provide the best return.

    Thanks in advance

  51. Phil

    Thanks for your help this week.  I'm new to this site.  Have a nice weekend, all. 

  52. pirateinvestor 


    can you e mail me 


  53. Phil, where do you trade your Greencoin? They aren’t listed on most coin exchanges.

  54. Pirati – "Lake Superior at unprecedented highs and waves that look like the ocean."

    Lake Superior = Ojibwe Gichigami. 

    Otchipwe-kitchi-gami = Ojibwe's Great Sea.

    Ojibwe = Ojibwa = Chippewa.

    Hence, the legend lives on from the Chippewa on down, of the big lake they call ""Gitche Gumee".  

  55. I phone is not working in cold weather. I heard people up North had problems with them; in fact never heard of anyone being able to use them outside. They are going to "fix" them. Outside is where we need those cell phones the most!! Really an urban item I guess.

  56. bitcoin cash almost @ $1000

  57. AAPL/Taihu – You're net $314.50 puts them way above the $1Tn mark.  At $900Bn now, it's like worrying that AAPL will add a GE in the near future.  I think there will be a pullback but I also think AAPL could easily be $200 by Jan 2020 – I don't understand the nature of the bet if you don't have any AAPL stock.  

    PCLN/8800 – There are always discrepancies like that because, while there are certain formulas that govern option pricing using Time and Volatility – there is also an auction process once they hit the market and, if people think June will reflect earnings that are better or worse than what the whole year will reflect, then they will place their bets accordingly.  

    With PCLN, perhaps the logic is that last June was a great time to go long as they ran up $200 as summer travel season kicked in, so that's where the most people are buying calls, driving up prices.  


    This is a stock that's moved over $100 in a month 12 times since Feb and you want to bet it doesn't move $262 by next June?  I hope you have a very, very bullish premise along with $14,380 per contract to buy PCLN if you are wrong.  It's not even about that, the June $1,600 puts are $95 so it's the quick $3,200 loss on a $100 point drop you need to worry about.  What will you do?  And if you hold it and it turns into $6,400 – what will you do?  As long as you are very comfortable with your plan and realize that a 20% drop would be $340, not just $200 – then you can make that kind of play.  

    You're welcome Lala – nice to meet you this week.  

    GreenCoin/Jet – I have no idea, Greg does it.  We have 150M of them in PSW Investments that we bought for only about $3,500 so, at 1 penny – we'll be at $1.5M after just over a year, so not too bad if we get there.  As I've mentioned, my plan is to promote them with BDC to vendors and such and also to create more volume by accepting them as payment at PSW (which also helps us accumulate more of them).  At the moment, a $500 Membership is 147,058 GreenCoins but, if we can get a few more vendors on board and get it down to 50,000, we'll hit our $1.5M gain and we'll sell 1/3 and then begin accumulating more until $15M (still only 0.10) and then sell another 1/3 for $5M and see if we can get it up to $1 (still 1/7,000th of a Bitcoin).

    Keep in mind though, the thing can drop 90% next week and that's hardly abnormal in the crypto space – look what happened after the late Sept spike.  My goal is to get some of our business partners to accept them and then hopefully some solar companies or maybe someone like WFM.  Even if they simply allow up to a $10 credit per order, people with solar homes can exchange their carbon credits for GreenCoins and then get $10 at WFM and they can brag about how great that is for the environment, etc.  

    FTR/Jabob – Well, there goes $7!

    IPhone/Pirate – Glad I didn't get mine yet.  Still want it though.  Maybe they'll wrap it in a little mink coat?  

  58. crs101    Hunt & Fish Club is a good $$$ NY restaurant a short walk to the theater district.

    Dear Evan Hansen's star, Ben Platt, is a cousin and the primary reason to see the show, though I understand he is leaving soon.  Its a good show but not uplifting. 

    While in New York, Chelsea Market is always fun. Dozens of restaurants under one roof, but better for lunch. If yo go to Russ and Daughters try for an odd time because there is limited seating.

  59. Scottmi – Hedy Lamarr – With Garbo, Turner and Grace Kelley….Pure ecstasy.  Best hits?

  60. Phil-you'd think the battery would keep it warm and running. I know the Samsungs work fine as long as they don't get way below freezing. Little Mink coat -, my laugh for the day.

    crs- Joe's Shanghai restaurant in China town is great. Your jammed into this small restaurant like the Puritans on the ships coming to the new world, but they have delicious pot stickers and other seafood etc.

  61. Phil,

    PCLN. Thanks for the insight to the mechanics of option pricing.

    Nope, not thinking of taking a WAG flier on the stock but rather trying to figure out a vehicle (like short puts) – short of owning the stk – to use to participate on the long side, entering just above a base with a mental stop to bail if the base breaks. Not here just yet, but the 1650 area seems to be a promising candidate. Because of the b/a spread, PCLN might not be suitable.

    Appreciate the cautionary thoughts.

  62. US stocks head lower as health care companies plunge

  63. Bombshell Report Could Reshape Washington’s Political Landscape

  64. Did the Trump Administration Just Give Big Pharma a Big Boost?

  65. Hi Phil, I was playing the MSFT butterfly but as it kept going higher I stopped writing calls closed the put and am now left with just the Jan 60 Call. I was looking at starting the butterfly again (2020 Call/Put)

    Buy 90 Call for $7.80         and Sell Feb 85 Call for $2.75    – 98 days

    Buy 70 Put for $4.90           and Sell Feb 85 Put for $4.40

    or I could just do the 2020 80 -90 BCS for $4.30 and wait and see.

    Your thoughts please, thanks.

  66. Socrates in the Age of Trump

  67. Joe's Shanhai/Pirate – I love that place.  Soup dumplings rule!  

    PCLN/800 – I would just take advantage of the large number and assume at least a 20% gain by 2020 to $2,000 and that means the 2020 $1,750 ($290)/$1,900 ($230) bull call spread at $60 will pay you $90 (150%) by itself and then, if it goes lower, you can sell $1,000 puts, which are $35, for $50 or better to make it a free (almost) spread.  If it doesn't go lower, then you are on track for the $90 gain.  If you got 10 of those for $60,000 and sold just 2 of the Jan $1,900 calls for $10 ($2,000), you'd have $24,000 worth of sales ahead of you while you wait.  

    RB with a big spike into the close!  

    MSFT/Motox – Well, if you spend just $12.70 on the longs and collect $7.15 for just over 1/10th the time, you are on a good path.  I like that set-up, nothing wrong with it.  Very little chance of MSFT failing $70 though so, if it were me, I'd go for the 2020 $80 ($12.20)/$95 ($6.20) bull call spread to cover the upside and sell the Jan $80 calls for $4.75 and the April $77.50 puts for $2.05 as I'm more comfortable with the spread (at net $0) and you simply roll the loser and everything you do going forward is profit.

    Have a great weekend,

    - Phil

  68. Thanks Phil, makes sense.

  69. A tsar is born

  70. NASA Believes They Know How To Make Mars Green Again

  71. Donald Trump’s Russia scandal just became real in the minds of Americans, and there’s no going back

  72. They were showing a TV show about Alibaba in France today and I never realized how much market cap they have – nearly as much as AMZN. But with sales much, much lower. Relative to earnings, they are cheap, but they sell at 18x sales! That's huge… AAPL sells at 4x sales and even AMZN is at 3.3x sales. I guess BABA is very profitable but expansion could be quite expensive I imagine. Quite interesting.

  73. Phil, thanks for your earlier answer to my AAPL rolling question in the morning. I did sell the Jan 175 calls for 6.16 along with the spread as I am aware of it being high now. I probably should have added that to my question also. Love those cherry calls for safety.